If fixed costs are 1000 and the marginal cost to produce one

If fixed costs are $1000 and the marginal cost to produce one more unit is $10 per unit, then Average Variable cost is u-shaped

Solution

The average variable costs and the average total costs of a firm are always U shaped because of application of law of variable proportions or returns to scale, which says that when variable factors are employed the at first the total productivity increases which leads to lower average costs than the output becomes constant and starts falling and hence the ATC and AVC starts rising.